Part I: From Peppi’s to Barroso’s
Out on €100,000 bail and risking a 10-year prison sentence, 50-year old Silvio Zammit pulls on his cigarette and looks out onto St Julian’s Bay from the terrace of his small restaurant, Peppi’s, on the northern coast of Malta.
He points to the stone walls that separate the sea from Sliema’s string of soulless residential buildings.
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As a teenager, he tagged the walls with slogans in support of Malta’s former governing party.
“My life, my friends, my family are all in the Nationalist Party,” he tells EUobserver.
“We are friends and we share the same political views and ideology,” he says of John Dalli - a Nationalist Party politician and a former EU health commissioner who lost his job in a 2012 tobacco lobbying scandal.
Zammit is forbidden from speaking about the case directly because it is sub judice.
But recalling the years before the scandal, he says his personal life was bound up with his wife and sons and with local politics.
He was born just 100 metres away from Peppi’s, in a corner house where there now stands a new building with the word “serenity” stencilled on a plaque by the front door.
In the 1990s, he turned the family-run bakery into a grill and cafe which caters mostly to budget-conscious British tourists. Peppi’s serves a full English breakfast from morning to night for under €10.
Apart from Peppi’s, he is a sometime circus impresario. He also used to run a small gambling agency, but he lost his licence in relation to the Dalli affair.
By his own admission, he did not complete his secondary school education and he has trouble forming complex sentences in written or spoken English.
But he has been active in politics in Malta - a Mediterranean micro-state of just 420,000 people where everybody knows everybody else - since he was just 13.
He briefly became deputy mayor of Sliema, the town which covers St Julians Bay. But he stepped down from the post the same day Dalli left office in Brussels on 16 October 2012.
Zammit’s direct role in what later came to be called “Dalligate” began at a lunch in Stockholm in October 2011 with two lobbyists from Estoc - the European smokeless tobacco council, an umbrella organisation which represents makers of mouth tobacco, commonly known by its Swedish name “snus”.
They also believed Zammit and Dalli were “friends”.
The lunch set in motion a series of events which is still playing out in the EU institutions and in courts in Malta and Luxembourg.
Snus is finely ground tobacco stuffed loose in small sachets and placed between the gum and the lip.
Due to restrictive EU laws, it can only be sold in Sweden.
Pro-snus EU lobbying was dealt a severe blow in 2004 when the EU court in Luxembourg ruled that the ban should be kept in place.
But the producers never gave up hope of unlocking the wider EU market - worth an estimated €500 million a year.
In 2008, the main European manufacturer, Swedish Match, even created a joint venture - SMPM International - with the world’s largest tobacco firm, Philip Morris, with a view to future EU expansion.
With Zammit’s “friend” Dalli in charge of overhauling EU tobacco laws, EU investigators say Swedish Match and Estoc saw a new window of opportunity.
They allege that Zammit and Gayle Kimberley, his associate and a former EU official, solicited first €60 million from Swedish Match then €10 million from Estoc in return for the commissioner’s influence.
They also say that whether Dalli was in on the scheme or not, he knew what they were doing and did nothing to stop it.
The money was never paid.
Instead, the snus makers tipped off Olaf, the EU’s anti-fraud office, about the attempted bribe.
Olaf launched an investigation and found “unambiguous and converging circumstantial pieces of evidence” - enough, in any case, for Dalli’s boss, the then European Commission chief, Jose Manuel Barrosso, to call for Dalli’s head.
Maltese police later started its own probe.
Zammit was arrested and is now on trial, charged with bribery and with trying to influence Dalli. The investigation into the former commissioner is ongoing. But Kimberley is free and has largely escaped scrutiny.
For their part, Zammit and Dalli say they are innocent.
Dalli also claims that he is the victim of a plot - orchestrated by the tobacco industry, EU officials, and Olaf - to get rid of him in order to delay and weaken his tough new Tobacco Products Directive.
He has challenged what he calls his dismissal from his European post in the EU court in Luxembourg.
The affair - already three years in the making - has brought to light: leaks; false testimony; alleged illegal "wire-taps"; EU conflicts of interest; shady political deals in Malta; an evangelical scam artist in the Bahamas; and adultery.
Some facts not included in Olaf’s leaked report and new email evidence obtained by EUobserver appear to back Zammit’s version of events and point the finger of blame at Kimberley.
Meanwhile, EU sources have shed new light on Olaf's battle with the European Parliament and with the anti-fraud body's own supervisors.
It is a scandal which, according to one senior MEP, will haunt the EU institutions and Barroso for the next 10 years.
Part II - Malta's 'Mr Teflon' - will be published on Tuesday 4 November